Mr. Forsyth (Chairman), Mr. Boomer, Ms. Shapazian and Mr. Stallkamp served as members of the Compensation Committee in 2004. Each of the members is an independent director. During 2004, no executive officer of Baxter
served as a director or as a member of the compensation committee of another company who had an executive officer that served as a member of Baxters Compensation Committee or as a director of Baxter.

The Board of Directors recognizes the importance of good corporate governance as a means of addressing the needs of Baxters stockholders, employees,
customers and community. Pursuant to the Delaware General Corporation Law, under which Baxter is organized, the business, property and affairs of Baxter are managed under the direction of the Board of Directors. Members of the Board are kept
informed of Baxters business through discussions with the Chairman and management, by reviewing materials prepared for them by management and by participating in meetings of the Board and its committees. During 2004, the Board held 11 meetings
and the Board committees held a total of 35 meetings. During the period for which they served in 2004, each incumbent director attended at least 89 percent of the aggregate number of Board meetings and Board committee meetings for committees on
which they served. The average attendance of these directors at all such meetings during the year was over 95 percent. Baxters Corporate Governance Guidelines, which are described below, provide that directors are expected to attend the annual
meeting of stockholders. In May 2004, nine out of the ten directors then continuing in office attended the annual meeting of stockholders.